Showtime sees a chance to take the fight to HBO in boxing

Showtime sees a chance to take the fight to HBO in boxing

By Bill King, Senior Writer

Published January 2, 2012

The newly hired head of Showtime’s sports division stood in a hotel meeting room in Atlantic City a few weeks ago, showing off a slickly produced promo for the first multimillion-dollar fight of 2012, the rematch between welterweights Victor Ortiz and Andre Berto. As if cued by the fading picture, one of the two men on the screen burst through the door.

Striding in with smile blazing, Ortiz grabbed Stephen Espinoza by the shoulders as an old friend would, then took a lap around the room, introducing himself to the producers, editors and cameramen there to document the day.

After pleasantries, it was time for Espinoza and Ortiz to head down the hall, where they would join Berto at a press gathering to promote the Feb. 11 fight, noteworthy as much for its television implications as it is for its place on the sports docket.

The charismatic Ortiz is a cornerstone of what Espinoza hopes to build at Showtime.Photo by: GETTY IMAGES

The first Ortiz-Berto bout, held in April, provided as exciting a night as there was last year for Showtime’s 500-pound gorilla of a competitor, HBO Sports, with both fighters knocked to the canvas twice. Yet when HBO went to the table to negotiate the rematch, it offered less than it paid for the first fight. “So low,” said Ortiz’s promoter, Richard Schaefer, “that I almost fell off my chair.”

Several top boxing promoters said the offer — about $1.7 million, or $400,000 less than the network paid for the first fight — sent a message. After years spending aggressively for fights even when no other network had the budget to compete, HBO was trimming its sails. The former head of the network’s sports division, Ross Greenburg, left the job in July. In October, HBO replaced him with Ken Hershman, who spent the last eight years in the same role at Showtime, where he had a boxing budget that insiders estimate ranged from one-fifth to one-half of HBO’s.

For Hershman’s replacement, Showtime Networks Chairman and CEO Matt Blank chose Espinoza, an attorney best known for his work with Oscar De La Hoya and his boxing company, Golden Boy Promotions.

Neither HBO nor Showtime discusses its boxing budget publicly. But two well-connected boxing sources said that, based on what they have been told and observed, HBO’s budget will be about $35 million this year, about half of what it spent as recently as five years ago. In contrast, Showtime will increase its budget to at least $28 million.

Espinoza

This narrowing smells like an opportunity to Espinoza, who qualifies that opinion by saying he does not, in fact, know how much or little HBO will spend in 2012. He says he was unaware HBO had started with a lowball offer for Ortiz-Berto. He simply knew that the fight was in the making, and that it would make for great television.

So early in November, days after he signed his Showtime contract, but before the network had announced his hire, Espinoza phoned Golden Boy CEO Schaefer with what he thought was the right offer for Ortiz-Berto II: $2 million. HBO quickly upped its bid but, in Schaefer’s words, it was “too little, too late.” Showtime got the fight for $2.2 million, only $100,000 more than HBO’s final offer, according to sources.

Showtime also promised CBS promotional assets that it previously had unlocked only to promote pay-per-views. Chief among them will be slots for the 30-second promo Espinoza showed off in Atlantic City.

“Before I’m even in the office, I’m writing a really large check for this fight because it’s something I strongly believe in,” Espinoza said. “Seeing the level of excitement and seeing the asset that we have to sell against and build a brand around in the next two months, I’m already confident it is a success.

“We’re sending the message that we’re a top-tier brand with top-tier content.”

It felt that way at Caesars Atlantic City last month, as Espinoza stumped in front of media assembled for the finals of the Super Six, a tournament Hershman created in an effort to build exposure for fighters who committed to multiple appearances on Showtime. He would be joined by Ortiz, Berto and Canadian star Lucian Bute, three fighters whom, along with Super Six champ Andre Ward, he considers cornerstones of what he hopes to build.

On the way out of the meeting room as they headed to the press conference, Espinoza pulled Ortiz to his shoulder.

“I didn’t even have the job yet and I was trying to buy this fight,” Espinoza said into the fighter’s ear. “Let’s go sell some tickets.”

■ ■ ■ ■

So one network writes a larger check than another and lands the rights to a sporting event. Happens all the time, right?

It does in most sports. But in boxing, there has been no real competition for U.S. TV rights in two decades. In boxing, promoters line up what they hope is a saleable fight. They set a price for the TV rights and take it to HBO. HBO says yes, or no, or makes a counteroffer, sometimes offering less money, sometimes suggesting a different match.

Only after that dance is concluded is the fight discussed anywhere else.

Hershman (above) left Showtime for HBO in October, opening the door for Espinoza.

“There really was no bidding between HBO and Showtime,” said Schaefer, who up until this year has been guaranteed four HBO dates a year. “Ken [Hershman] was very creative and maybe he spent more money the last couple of years, but there was no way he could compete financially with HBO. If HBO wanted the fight, they got it. End of story. If it got to Ken it was because Ross said no.

“That may not be the case any longer.”

Other promoters put the perceived change more bluntly.

“I hear that Showtime is going to increase their budget and actually go to war with HBO,” said promoter Gary Shaw, who in the last 10 years has sold more fights to Showtime than any other promoter.

On fight day in Atlantic City, while Ortiz and Berto were holding court down the hall, the latter’s promoter, Lou DiBella, laid out the implications of the shifting landscape while guzzling back-to-back iced coffees.

“One of the best things that could have happened for boxing was Showtime getting this [Ortiz-Berto] fight,” said DiBella, a former TV executive who ran boxing for HBO back when its budget was flush. “Now, everyone is on alert that there’s a marketplace.

“It’s a shot across the bow and it makes a statement. Go cut your budgets. But if you make a mistake I’m going to jump on it. If you let me have something totally compelling that’s going to drive subscribers to my network, I’m going to spend the money to get it. That’s good for boxing.”

For its part, HBO has little to say about the perceived shift. Mark Taffet, senior vice president of sports operations and pay-per-view, said the network offered what it thought was the appropriate fee for Ortiz-Berto II, and that the promoters “made a business decision” to take the fight elsewhere. He would not discuss specifics of the negotiation, a common stance at HBO Sports. Taffet said that if there is talk of increased competition from Showtime it should be left to his new boss, Hershman, who starts at HBO on Jan. 8.

After losing the Ortiz-Berto fight, HBO was relatively quick to announce three others for early 2012, including a World Championship Boxing card promoted by Top Rank featuring Julio Cesar Chavez Jr. and Nonito Donaire. Its flagship World Championship Boxing series attracted an average of 1.2 million viewers for first-run showings last year, up 10 percent.

Still, the perception among promoters is that HBO has been handcuffed for 2012 while awaiting Hershman’s arrival. And it’s not all because of Ortiz-Berto. There also was the tabling of a developmental series that Greenburg approved before leaving last year.

Already a business in which volatility is expected and instability is the norm, promoters say the last few months have felt especially transitory. They all know Hershman well from years negotiating with him at HBO, but don’t know what changes he might have in mind for the network — or that it might require of him.

And then there is Espinoza. They know him well, too.

Or at least they think they do.

■ ■ ■ ■

A couple of hours after wrapping up with Ortiz and Berto, Espinoza leaned over a table at a nearby noodle bar, flipping through news clippings between sips of his soup. He checked emails on his BlackBerry and handed a fight program over to a fan seated at a nearby booth.

“If you wanted to see a Golden Boy conspiracy, we gave you one right off the bat,” Espinoza said, nodding. “Golden Boy fighter, big money. But I’ll give everybody credit. I didn’t hear it, at least not to my face. They see what the entire commitment is, so they know Richard wasn’t doing me any favors. And it’s a fight anybody would want to buy, so I’m not doing any favors for him.”

This is what people in boxing know about Stephen Espinoza: As lawyer to De La Hoya, he represented the fighter in a bitter, ugly dispute with his former promoter, Top Rank founder Bob Arum, crafting the legal argument that made the fighter a free agent. He then worked on the formation of De La Hoya’s promotion company, Golden Boy, where he has had a hand in every one of its fighter, sponsor and television contracts.

Nobody questions Espinoza’s understanding of boxing’s oddball structure or its iconoclastic cast of characters. But they wonder how he fits in at a TV network, and particularly one that appears poised to make a run at the A-list. When they voice their concern candidly, it is what you would expect it to be — that Showtime installed Espinoza to sidle up to Golden Boy, and that he will favor them and cut out the rest when filling slots on the Showtime programming calendar.

In conversations with each of the major promoters in his first month on the job, Espinoza worked to allay that concern. “That, I told them, is not going to happen,” Espinoza said. “I want to succeed in this job. And I’m not going to last very long if I’m favoring Golden Boy. That’s not going to serve me here.

“I picked up my life and moved [from Los Angeles] to New York. You think I’m going to risk all this because I like Oscar and Richard? I’d be less than intelligent. So forget ethically, morally and programming-wise — all of which matter to me, by the way. From a self-interest standpoint, remaining too close to Golden Boy wouldn’t make any sense.”

The connection to Golden Boy, and more importantly the fight game, got Espinoza considered for the Showtime job. This, everyone in boxing knows.

This is what most of them don’t know: In Espinoza’s mind — and that of the Showtime executive who hired him, Blank — he has worked in television for the last 15 years. De La Hoya and Golden Boy are clients. But so is Gavin Polone, the executive producer of “Curb Your Enthusiasm” and “Gilmore Girls,” as well as films including “Zombieland” and “Secret Window.” And so is Tyler Perry, who went the grassroots, self-financed route to land atop the Forbes list as the highest paid man in entertainment last year. When one of Ward’s business managers approached Espinoza after the fighter won the Super Six, it wasn’t to talk about matchups, but to ask whether he could help with an introduction to Perry.

Espinoza has represented producers, writers and directors. He has secured financing for TV series’ and films.

So when he sat down for the first time with Blank in what would turn out to be a whirlwind courtship, they quickly found they spoke the same language.

During dinner with Espinoza before the Super Six final, Blank described the fit.

“Boxing is not a terribly linear world,” Blank said, smiling at his own understatement. “So you have to have somebody who understands how the boxing business works … Once we finally met Stephen, it was a pretty easy hire. The intangible in this case is passion. He had it. And you have to. Because you don’t want somebody who comes to work every day saying, ‘I can’t believe I work in this crazy business.’

“Stephen knows what he’s getting into. And he really wants to be the guy who makes this work.”

At dinner in Atlantic City, Blank stressed the role he saw for boxing on premium cable. It wasn’t about ratings, but subscribers. There was a time when people bought HBO or Showtime to get an early crack at a blockbuster movie, but Netflix, Xboxes and iPads snapped the barb off that hook. Premium networks now are about original programming, and the brand image it conveys.

“Showtime was a second-class brand for years,” Blank said. “It’s very hard to turn something like that around. But we’re now a first-class brand. And that’s important.

“We don’t have to win at nine o’clock on Sundays. We have to win in December, when people pay that bill. And that happens because of the brand. We win because of the brand and its franchises.

“Five or 10 years ago, all those big movies — we’d say they were ours. Now they’re everywhere. You can’t say they’re ours. But this fight tonight? It’s mine. It’s Stephen’s.”

In the coming months, the boxing world will watch closely to see what else is theirs.